Technical Market Report - Monday, July 23

The good news is:

The Nasdaq composite (OTC) closed at an all-time high last Tuesday.

​The Negatives

Another unconfirmed high.

The first chart covers the past 6 months showing the OTC in blue and a 10% trend (19 day EMA) of Nasdaq new highs (OTC NH) in green. Dashed vertical lines have been drawn on the 1st trading day of each month.

 OTC NH is a long way from confirming the new index high. 

The next chart is similar to the one above one except it shows the S&P 500 (SPX) in red and NY NH, in green, has been calculated with NYSE data.

Both NY NH and the index went nowhere last week. 

The Positives

Last week all of the major indices were nearly unchanged.

The next chart covers the past 6 months showing the SPX in red and a 40% trend (4 day EMA) of NYSE new highs divided by new highs + new lows (NY HL Ratio), in red. Dashed horizontal lines have been drawn at 10% levels for the indicator; the line is solid at the 50%, neutral, level.

NY HL Ratio finished the week at a comfortable 69%.

The next chart is similar to the one above except it shows the OTC in blue and OTC HL Ratio, in red, has been calculated with Nasdaq data.

OTC HL Ratio was up slightly finishing the week at a comfortable 72%.

Seasonality

Next week includes the 5 trading days prior to the 4th Friday of July during the 2nd year of the Presidential Cycle. The tables below show the daily change, on a percentage basis for that period.  

OTC data covers the period from 1963 to 2018 while SPX data runs from 1953 to 2018. There are summaries for both the 2nd year of the Presidential Cycle and all years combined. Prior to 1953, the market traded 6 days a week so that data has been ignored.

Average returns for the coming week have been modestly positive.

Report for the week before the 4th Friday of July.
The number following the year is the position in the Presidential Cycle.
Daily returns from Monday through the 4th Friday.

OTC Presidential Year 2
 Year       Mon     Tue     Wed    Thur    Fri    Totals
 1966-2   0.42%   0.08%  -0.10%  -0.56%  -0.05%  -0.20%
 1970-2   0.01%   0.13%   0.46%   0.38%  -0.22%   0.76%
 1974-2   0.03%   1.39%   0.26%  -1.50%  -0.93%  -0.75%

 1978-2  -0.01%   0.16%   0.56%   0.52%   0.56%   1.79%
 1982-2  -0.05%   0.44%   0.42%   0.30%   0.03%   1.13%
 1986-2   0.00%   0.00%   0.00%   0.00%   0.00%   0.00%
 1990-2  -2.33%  -0.47%   0.65%   0.00%  -0.64%  -2.79%
 1994-2   0.17%  -0.46%  -0.91%   0.32%   0.23%  -0.64%

 Avg     -0.56%  -0.08%   0.18%   0.28%   0.05%  -0.13%

 1998-2   0.12%  -1.90%  -0.79%   2.02%  -2.46%  -3.01%
 2002-2  -2.77%  -4.18%   4.98%  -3.89%   1.78%  -4.08%
 2006-2   2.05%   0.58%  -0.17%  -0.77%   1.93%   3.63%
 2010-2   0.88%   1.10%  -1.58%   2.68%   1.05%   4.13%
 2014-2   0.00%   0.00%   0.00%   0.00%   0.00%   0.00%

 Avg      0.07%  -1.10%   0.61%   0.01%   0.57%   0.17%

OTC summary for Presidential Year 2 1966 - 2014 
 Avg     -0.13%  -0.28%   0.34%  -0.05%   0.12%   0.00%
 Win%       64%     64%     55%     55%     55%     45%

OTC summary for all years 1963 - 2017
 Avg     -0.31%  -0.11%   0.14%   0.08%  -0.01%  -0.20%
 Win%       43%     57%     57%     63%     61%     54%


SPX Presidential Year 2
 Year       Mon     Tue     Wed    Thur    Fri    Totals
 1954-2  -0.27%  -0.47%   0.64%   0.80%   0.13%   0.83%

 1958-2   0.00%   0.00%   0.00%   0.00%   0.00%   0.00%
 1962-2  -0.02%  -0.77%   0.18%   0.55%   0.76%   0.69%
 1966-2  -0.10%  -0.76%  -0.95%   0.01%  -0.13%  -1.93%
 1970-2  -0.22%   0.15%   0.35%   0.04%  -0.03%   0.30%
 1974-2   0.32%   1.00%   0.40%  -1.19%  -1.88%  -1.34%

 Avg      0.00%  -0.09%  -0.01%  -0.15%  -0.32%  -0.57%

 1978-2  -0.03%   0.74%   0.65%   0.46%   0.46%   2.28%
 1982-2  -0.31%   0.73%  -0.11%   0.04%  -0.27%   0.09%
 1986-2   0.00%   0.00%   0.00%   0.00%   0.00%   0.00%
 1990-2  -1.74%   0.14%   0.37%  -0.33%  -0.69%  -2.27%
 1994-2   0.23%  -0.30%  -0.50%   0.22%   0.11%  -0.23%

 Avg     -0.46%   0.33%   0.10%   0.10%  -0.10%  -0.03%

 1998-2   0.57%  -1.49%  -0.44%   1.57%  -1.94%  -1.73%
 2002-2  -3.29%  -2.70%   5.73%  -0.56%   1.69%   0.86%
 2006-2   1.66%   0.63%  -0.04%  -0.41%   1.22%   3.06%
 2010-2   0.60%   1.14%  -1.28%   2.25%   0.78%   3.49%
 2014-2   0.00%   0.00%   0.00%   0.00%   0.00%   0.00%

 Avg     -0.12%  -0.60%   0.99%   0.71%   0.44%   1.42%

SPX summary for Presidential Year 2 1954 - 2014 
 Avg     -0.20%  -0.15%   0.38%   0.27%   0.02%   0.32%
 Win%       38%     54%     54%     69%     54%     62%

SPX summary for all years 1953 - 2017
 Avg     -0.18%  -0.10%   0.30%   0.18%   0.00%   0.20%
 Win%       33%     53%     62%     63%     60%     56%

Conclusion

Talk about dull. Last week neither prices nor the breadth indicators showed any life. Seasonality does not suggest anything better for next week.

I expect the major averages to be lower on Friday, July 27 than they were on Friday, July 20.

Last week the OTC, after hitting a new high on Tuesday, closed down a little while the other major indices were up a little. The total weekly moves were all less than 1%. I am calling last weeks negative forecast a tie.